1. Closed-end Funds About 700 funds Fixed number of shares Shares sell like stock Generally hold less liquid assets A lot are country funds or bond funds

2. NAV versus price Generally sell at a discount (10%) (Price – NAV) / NAV Can sell at a premium Why? Taxes Management fees Investor sentiment

3. Distinctions from Open end Less liquid for investors – no redemption Fewer shareholders services Leverage can increase returns Don’t have to hold cash No inflows or outflows Can invest in less liquid securities

4. Raising Capital Rights offer to existing shareholders Leverage – commonly used Sell new shares

5. Dividend returns NAV = $10, Price = $9 Dividend yield = $1/$9 = 11.11%, not 10% Closed end fund dividend yield generally higher than open end, all else the same

6. www.closed-endfunds.com

7. Real Estate (REITS) www.nareit.com www.investinreits.com

8. REITs 75% of assets in real estate Pass through at least 90% of income 125 traded - $300 billion in assets 10-15% of US institutional quality real estate As of July 31, 2008 Dividends – currently about 5.8% average

9. What are REITs? REITs established by legislation passed in 1960 providing small investors access to real estate investment Operating companies which own and manage commercial real estate Assets consist of, and revenues primarily come from, real estate investments Can selectively operate ancillary businesses

10. REIT Types Equity (91%) Own real estate assets Revenues come principally from rents Mortgage (7%) lend to real estate owners acquire loans or mortgage-backed securities Hybrid (2%) Combination of equity and mortgage REITs

11. What Makes a REIT Different? Asset and Revenue Test 75 percent of assets must be invested in: Equity ownership of real property Mortgages Other REIT shares 75 percent of revenue must come from Rents from real property Mortgage interest Gains from sale of real property

12. Taxable REIT Subsidiaries (TRSs) Allows REITs to more effectively compete with other real estate owners May provide services to tenants to third parties such as landscaping, cleaning and concierge Investments in TRSs limited to 20 percent of REIT’s assets TRSs must pay taxes at the corporate level

13. Private 1) Institutional investors – large positions 2) Packaged with other services offered by a financial professional 3) Incubator – start up hoping eventually to go public

14. Shares are traded like a stock Commercial or residential property REIT mutual funds

18. Why REITs instead of direct investment? Property sector and geographic diversification Professional and experienced management Real-time pricing Low transaction costs Liquidity

19. REIT advantages Stable earnings from long-term leases Attractive dividend yield Competitive risk-adjusted returns Diversification

23. Stable earnings Long-term leases, typically 5 to 15 years Stable revenues – lease duration of 10 years, only 10% of leases expire in a year Expense reimbursements – leases for commercial property structures so tenants pay increases in expenses and taxes over life of lease